Nvidia Reports Huge Data Center Business Boom, Stock Is Jumping

In third quarter earnings published Thursday, the Santa Clara, Calif.-based chipmaker reported third quarter revenue of $2 billion (vs. $1.69 billion estimate), up 54% year-over-year, and earnings of 83 cents per share (vs. 57 cents estimate), up 89% from the previous year.

Nvidia's graphics processors are mostly used to power the latest gaming graphics, but are increasingly being used to run intensive artificial intelligence software in the data center and in autonomous vehicles.

The latest earnings show its AI business is growing stronger than anyone expected. Its data center business is on fire, growing to $240 million, up 193% from the previous year. Its automotive business grew 61% year-over-year to $127 million. Its core gaming business is also doing very well, with revenue of $1.2 billion, up 63% year-over-year.

"We had a breakout quarter -- record revenue, record margins and record earnings were driven by strength across all product lines," said Nvidia CEO and cofounder Jen-Hsun Huang, in a statement. "Our new Pascal GPUs are fully ramped and enjoying great success in gaming, VR, self-driving cars and datacenter AI computing.

"We have invested years of work and billions of dollars to advance deep learning," Huang continued. "Our GPU deep learning platform runs every AI framework, and is available in cloud services from Amazon, IBM, Microsoft and Alibaba, and in servers from every OEM. GPU deep learning has sparked a wave of innovations that will usher in the next era of computing."

Despite uncertainly in the markets this week following Donald J. Trump's victory in the US Presidential Election, Nvidia's stock is spiking more than 15% following release of its third quarter earnings.

Nvidia began shipping its "supercomputer in a box" -- the DGX-1 -- to research organizations, universities and companies like SAP. The company claims the $130,000 supercomputer delivers performance that's on par with 250 conventional servers.

Nvidia recently scored a major autonomous vehicle deal with Tesla. The electric car company said it would be using Nvidia GPUs for its Autopilot 2.0, which will eventually allow the cars to drive completely autonomously one day, the company claimed. Nvidia's Drive PX 2 computer will be powering all of Tesla's new vehicles -- the Model S, Model X and Model 3.

"It's hard to spot a hole right now in their lineup and as self-driving cars and machine learning become more popular, I believe Nvidia will just keep improving," said tech analyst Patrick Moorhead.

Nvidia expects fourth quarter earnings to be $2.1 billion.

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